Mr Leung said the recently established Innovation and Technology Bureau (ITB) would support, co-ordinate and complement Hong Kong's innovation and technology development.

"It will ... co-ordinate the work of universities, the Hong Kong Science Park, industrial estates, Cyberport, the Productivity Council, the Applied Science and Technology Research Institute and four other research and development centres, setting up a robust system on scientific research, development and production," he said.

Mr Leung said Hong Kong's research efforts are concentrated in universities, and that the key issue in developing innovation and technology was how to commercialise the research results of universities.

"To encourage institutions funded by the University Grants Committee to carry out more mid-stream applied research projects, the Government will allocate $2 billion to the ITB," he said.

"Investment income from the allocation will be used to fund research undertaken by the institutions."

The Government will also set aside more than $100 million a year to support research and development collaboration in a wide range of disciplines between Hong Kong and the Mainland's six Hong Kong branches of the Chinese National Engineering Research Centres and the 16 Partner State Key Laboratories in Hong Kong.

Mr Leung said the world-renowned Karolinska Institutet of Sweden would open its first overseas research facility at Science Park, while the Massachusetts Institute of Technology would establish its first overseas Innovation Node in Hong Kong.

"Hong Kong enjoys the advantages of 'one country' and 'two systems' in developing the innovation and technology industry. In addition to attracting top research and development institutions from around the world, we can more proactively seek co-operation opportunities with the Mainland at both national and local levels," he said.

He said that Science Park's gross floor area would increase to 330,000 square metres upon completion of Phase 3, meeting development needs for the next two to three years. He added that the Hong Kong Science and Technology Parks Corporation plans to increase the park's gross floor area by about 70,000 square metres.

The Chief Executive said "re-industrialisation" is also a potential new area for economic growth. He said the Government and the Hong Kong Science and Technology Parks Corporation had revised the industrial estate policy to promote smart production and attract high value-added technology industries, as well as high value-added manufacturing processes.

He added that the Hong Kong Productivity Council would support the industrial upgrading and transformation, helping companies embrace re-industrialisation and move towards high value-added production.

He said that given the anticipated increase in the demand for sites for scientific research and new industrial use, "the Government will identify sites near the Liantang/Heung Yuen Wai Boundary Control Point to develop Science Park and industrial estates".

Mr Leung said the start-up scene in Hong Kong, including incubation and co-working spaces, has shown encouraging growth in recent years.

He said that through Science Park and Cyberport, the Government would continue to give full support to start-ups at different stages of development.

"Cyberport will increase incubation scheme quotas and establish new clusters for areas such as financial technology and e-commerce to meet the latest developments of the industry and the market," he said.

"Cyberport will also increase facilities such as Smart-Space small offices and workstations by 50 per cent in the coming year and explore ways to better utilise its facilities and spaces, so as to cater for the development needs of the ICT (information and communication technology) industry.

"Cyberport will allocate $200 million to launch a Cyberport Macro Fund for investment in its ICT start-ups."

Mr Leung added that the Government would set aside $2 billion to set up an Innovation and Technology Venture Fund to invest with private venture capital funds on a matching basis. This, he said, would attract more investment from venture capital funds in local innovation and technology start-ups.

The Chief Executive noted that innovation and technology can improve everyday life in a wide range of areas, including communication, transportation, healthcare, education, the environment, public order, consumer spending and food safety.

He said the Government would set aside $500 million to set up an Innovation and Technology Fund for Better Living. The Fund would finance projects that apply innovative ideas and technology to our daily life.

The Government will progressively double the number of free Wi-Fi hotspots to 34,000 within three years to provide the services at all public rental housing estates and public hospitals, as well as markets, parks, sitting-out areas, promenades, tourist spots, public transport interchanges and land boundary control points.

"Existing Wi-Fi connection speed at Government venues will be progressively doubled and security enhanced," he said.

"We will offer free Wi-Fi at all youth service centres and study rooms run by the Government and non-profit-making organisations, and work with schools to improve the quality of their Wi-Fi services in order to support e-learning."